Question 1

Joe likes peanut butter and jelly sandwiches for lunch. We can conclude that for Joe the cross elasticity of demand for peanut butter with respect to jelly is

Accepted Answer

A)  positive because jelly and peanut butter are substitutes. 
B)  positive because jelly and peanut butter are complements. 
C)  negative because jelly and peanut butter are substitutes. 
D)  negative because jelly and peanut butter are complements. 
A)  positive because jelly and peanut butter are substitutes. 
B)  positive because jelly and peanut butter are complements. 
C)  negative because jelly and peanut butter are substitutes. 
D)  negative because jelly and peanut butter are complements.

Question 2

A 10 percent decrease in income decreases the quantity demanded of pizza by 3 percent. The income elasticity of demand for pizza is

Accepted Answer

A)  -0.3. 
B)  0.3. 
C)  3.3. 
D)  10.0. 
A)  -0.3. 
B)  0.3. 
C)  3.3. 
D)  10.0.

Question 3

When the price of a CD is $13 per CD, 39,000,000 CDs per year are supplied. When the price is $15 per CD, 41,000,000 CDs per year are supplied. What is the elasticity of supply for CDs?

Accepted Answer

A)  2.86 
B)  0.35 
C)  0.14 
D)  0.05 
A)  2.86 
B)  0.35 
C)  0.14 
D)  0.05

Question 4

-The table above gives the demand schedule for a good. Using the midpoint method, find the price elasticity of demand between points A and B, between B and C, between C and D, and between D and E.

Accepted Answer

The price elasticity of demand between p

Question 5

Damage from floods and hurricanes which destroy a large portion of this year's crop of oranges will definitely make oranges more price inelastic in supply.

Accepted Answer

A) True 
 B)False

Question 6

Specialty chocolate bars with a high cocoa content have been drawing a lot of attention in gourmet circles in 2008 but the price of cocoa beans has increased more than 44 percent in this time period. In response to the increase in the price of cocoa beans, Rogue Chocolatier has increased the price of their gourmet chocolate bars by 20 percent. Rogue observes the quantity of their bars sold decreased by 15 percent. Based on this news clip, what does the price elasticity of demand for gourmet chocolate bars equal?

Accepted Answer

A)  0.75 
B)  1.25 
C)  1 
D)  0.66 
A)  0.75 
B)  1.25 
C)  1 
D)  0.66

Question 7

An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to

Accepted Answer

A)  1.80. 
B)  0.55. 
C)  0.75. 
D)  0.40. 
A)  1.80. 
B)  0.55. 
C)  0.75. 
D)  0.40.

Question 8

The price elasticity of supply is calculated as the

Accepted Answer

A)  quantity supplied divided by the per unit cost of production. 
B)  quantity supplied divided by the percentage change in quantity demanded. 
C)  percentage change in quantity supplied divided by the percentage change in price. 
D)  percentage change in price divided by the percentage change in quantity demanded. 
A)  quantity supplied divided by the per unit cost of production. 
B)  quantity supplied divided by the percentage change in quantity demanded. 
C)  percentage change in quantity supplied divided by the percentage change in price. 
D)  percentage change in price divided by the percentage change in quantity demanded.

Question 9

On December 10 the price of a Christmas tree is $50 and 100 trees are purchased. On December 20 the demand for Christmas trees decreases so that the price falls to $30 and 20 trees are purchased. From this set of facts, the

Accepted Answer

A)  demand for Christmas trees is price inelastic. 
B)  demand for Christmas trees is price elastic. 
C)  supply of Christmas trees is inelastic. 
D)  supply of Christmas trees is elastic. 
A)  demand for Christmas trees is price inelastic. 
B)  demand for Christmas trees is price elastic. 
C)  supply of Christmas trees is inelastic. 
D)  supply of Christmas trees is elastic.

Question 10

Because Product X has a very small, positive income elasticity of demand, it is likely that product X is a

Accepted Answer

A)  luxury. 
B)  necessity. 
C)  product with many good substitutes. 
D)  product with many good complements. 
A)  luxury. 
B)  necessity. 
C)  product with many good substitutes. 
D)  product with many good complements.

Question 11

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will ________ because the demand for ice cream is ________.

Accepted Answer

A)  decrease; price inelastic 
B)  increase; price inelastic 
C)  increase; price elastic 
D)  decrease; price elastic 
A)  decrease; price inelastic 
B)  increase; price inelastic 
C)  increase; price elastic 
D)  decrease; price elastic

Question 12

A rise in the price of a product lowers the total revenue from the product if the

Accepted Answer

A)  income elasticity of demand exceeds 1. 
B)  good is an inferior product. 
C)  demand for the product is inelastic. 
D)  demand for the product is elastic. 
A)  income elasticity of demand exceeds 1. 
B)  good is an inferior product. 
C)  demand for the product is inelastic. 
D)  demand for the product is elastic.

Question 13

Blue pens and black pens are close substitutes. The cross elasticity of demand for black pens with respect to the price of blue pens is

Accepted Answer

A)  positive. 
B)  negative. 
C)  equal to 1. 
D)  zero. 
A)  positive. 
B)  negative. 
C)  equal to 1. 
D)  zero.

Question 14

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $2.00 to $1.50, then total revenue would ________ because demand is ________.

Accepted Answer

A)  decrease; elastic 
B)  increase; elastic 
C)  decrease; inelastic 
D)  increase; inelastic 
A)  decrease; elastic 
B)  increase; elastic 
C)  decrease; inelastic 
D)  increase; inelastic

Question 15

"The number of substitutes available affects the price elasticity of demand for a good. So one way to know if apples and oranges are substitutes for each other is to look at the price elasticity of demand for each." Comment on this assertion.

Accepted Answer

Their separate elasticities do not indic

Question 16

Because of an increase in the price of leather, the price of a pair of women's dress shoes increased 12 percent. If the price elasticity of demand for women's dress shoes is 0.85, which of the following will happen?

Accepted Answer

A)  Total expenditure on women's dress shoes decreases. 
B)  The number of pairs of women's dress shoes demanded decreases by 10.2 percent. 
C)  Total revenue from the sale of women's dress shoes decreases. 
D)  none of the above 
A)  Total expenditure on women's dress shoes decreases. 
B)  The number of pairs of women's dress shoes demanded decreases by 10.2 percent. 
C)  Total revenue from the sale of women's dress shoes decreases. 
D)  none of the above

Question 17

If the demand for cigarettes decreases after the U.S. Surgeon General publicizes five new diseases associated with smoking, this is conclusive evidence that the demand for cigarettes is elastic.

Accepted Answer

A) True 
 B)False

Question 18

When the price elasticity of demand for a good equals

Accepted Answer

A)  0, the demand curve is vertical. 
B)  0, the demand curve is horizontal. 
C)  1, the demand curve is vertical. 
D)  1, the demand curve is horizontal. 
A)  0, the demand curve is vertical. 
B)  0, the demand curve is horizontal. 
C)  1, the demand curve is vertical. 
D)  1, the demand curve is horizontal.

Question 19

Of the following items, which has the most inelastic demand?

Accepted Answer

A)  food 
B)  fruit 
C)  apples 
D)  Gala apples 
A)  food 
B)  fruit 
C)  apples 
D)  Gala apples

Question 20

On most days the price of a rose is $1 and 80 roses are purchased. On Valentine's Day the demand increases so that the price of a rose rises to $2 and 320 roses are purchased. Therefore, the price elasticity of

Accepted Answer

A)  demand for roses is about 1.8. 
B)  demand for roses is about 0.55. 
C)  supply of roses is about 1.8. 
D)  supply of roses is about 0.55. 
A)  demand for roses is about 1.8. 
B)  demand for roses is about 0.55. 
C)  supply of roses is about 1.8. 
D)  supply of roses is about 0.55.

Joe likes peanut butter and jelly sandwiches for lunch. We can conclude that for Joe the cross elasticity of demand for peanut butter with respect to jelly is

A 10 percent decrease in income decreases the quantity demanded of pizza by 3 percent. The income elasticity of demand for pizza is

When the price of a CD is $13 per CD, 39,000,000 CDs per year are supplied. When the price is $15 per CD, 41,000,000 CDs per year are supplied. What is the elasticity of supply for CDs?

-The table above gives the demand schedule for a good. Using the midpoint method, find the price elasticity of demand between points A and B, between B and C, between C and D, and between D and E.

Damage from floods and hurricanes which destroy a large portion of this year's crop of oranges will definitely make oranges more price inelastic in supply.

An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to

The price elasticity of supply is calculated as the

On December 10 the price of a Christmas tree is $50 and 100 trees are purchased. On December 20 the demand for Christmas trees decreases so that the price falls to $30 and 20 trees are purchased. From this set of facts, the

Because Product X has a very small, positive income elasticity of demand, it is likely that product X is a

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will because the demand for ice cream is .

A rise in the price of a product lowers the total revenue from the product if the

Blue pens and black pens are close substitutes. The cross elasticity of demand for black pens with respect to the price of blue pens is

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $2.00 to $1.50, then total revenue would because demand is .

"The number of substitutes available affects the price elasticity of demand for a good. So one way to know if apples and oranges are substitutes for each other is to look at the price elasticity of demand for each." Comment on this assertion.

Because of an increase in the price of leather, the price of a pair of women's dress shoes increased 12 percent. If the price elasticity of demand for women's dress shoes is 0.85, which of the following will happen?

If the demand for cigarettes decreases after the U.S. Surgeon General publicizes five new diseases associated with smoking, this is conclusive evidence that the demand for cigarettes is elastic.

When the price elasticity of demand for a good equals

Of the following items, which has the most inelastic demand?

On most days the price of a rose is $1 and 80 roses are purchased. On Valentine's Day the demand increases so that the price of a rose rises to $2 and 320 roses are purchased. Therefore, the price elasticity of

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 4: Elasticity

Joe likes peanut butter and jelly sandwiches for lunch. We can conclude that for Joe the cross elasticity of demand for peanut butter with respect to jelly is

A 10 percent decrease in income decreases the quantity demanded of pizza by 3 percent. The income elasticity of demand for pizza is

When the price of a CD is $13 per CD, 39,000,000 CDs per year are supplied. When the price is $15 per CD, 41,000,000 CDs per year are supplied. What is the elasticity of supply for CDs?

-The table above gives the demand schedule for a good. Using the midpoint method, find the price elasticity of demand between points A and B, between B and C, between C and D, and between D and E.

Damage from floods and hurricanes which destroy a large portion of this year's crop of oranges will definitely make oranges more price inelastic in supply.

An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to

The price elasticity of supply is calculated as the

On December 10 the price of a Christmas tree is $50 and 100 trees are purchased. On December 20 the demand for Christmas trees decreases so that the price falls to $30 and 20 trees are purchased. From this set of facts, the

Because Product X has a very small, positive income elasticity of demand, it is likely that product X is a

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will ________ because the demand for ice cream is ________.

A rise in the price of a product lowers the total revenue from the product if the

Blue pens and black pens are close substitutes. The cross elasticity of demand for black pens with respect to the price of blue pens is

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $2.00 to $1.50, then total revenue would ________ because demand is ________.

"The number of substitutes available affects the price elasticity of demand for a good. So one way to know if apples and oranges are substitutes for each other is to look at the price elasticity of demand for each." Comment on this assertion.

Because of an increase in the price of leather, the price of a pair of women's dress shoes increased 12 percent. If the price elasticity of demand for women's dress shoes is 0.85, which of the following will happen?

If the demand for cigarettes decreases after the U.S. Surgeon General publicizes five new diseases associated with smoking, this is conclusive evidence that the demand for cigarettes is elastic.

When the price elasticity of demand for a good equals

Of the following items, which has the most inelastic demand?

On most days the price of a rose is $1 and 80 roses are purchased. On Valentine's Day the demand increases so that the price of a rose rises to $2 and 320 roses are purchased. Therefore, the price elasticity of

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will because the demand for ice cream is .

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $2.00 to $1.50, then total revenue would because demand is .